Until recently there were no statutes relating to homeowner association reserve accounts. In 2007, Section 720.303(6) of the Florida Statutes was added, and the statute sets forth a number of rules which may apply to restricted reserve accounts. Unless there are provisions in the governing documents of the association which require the association to fund and use reserves for specific purposes, then the only circumstances that reserve funds are considered to be restricted under the statute are either: (1) where the developer originally established and funded the reserve account during developer control of the association; or (2) where a majority vote of the owners was held after the 2007 statute was adopted, in order to confirm or establish that a particular reserve account was restricted as to use.

If reserve accounts are considered to be “restricted,” either under the governing documents of the association or the statutes, then without a vote of the membership, the funds in a reserve account can only be used for the specific purposes for which they have been reserved (e.g., painting or repaving). Further, the statutes require that reserve accounts be fully funded in the budget each year unless the members vote to waive or reduce the level of funding.

If reserve accounts are unrestricted, the board may use the monies in these reserve accounts for any proper expenditure of the homeowners’ association, either for operating purposes or for deferred maintenance or improvements.

It is therefore important for homeowners’ associations to review any reserve accounts which currently may exist, in order to determine whether these are restricted as to use. If not, the board may wish to consider a membership vote if it wishes to restrict the use of reserve funds in order to ensure that funds set aside for a specific purpose are not used for other purposes without a membership vote.

If you have any questions regarding any of these issues, please contact your association attorney.

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This Blog was prepared by Michael J. Brudny, Esq. of Taylor & Carls, P.A. The information contained herein should not be acted upon without professional legal advice. The opinions expressed herein are as of the date hereof, and this law firm undertakes no obligation to advise of subsequent changes in the law.

The firm of Taylor & Carls, P.A., with offices located in Altamonte Springs, Oldsmar and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.